Arky Freed: Vendetta Victim Or Villain?

A legal civil war has broken out in Miami. And in the center of the fray is Miami-based Arky, Freed, Stearns, Watson, Greer, Weaver and Harris, the ninth largest law firm in Florida.

Four former clients have sued the law firm stemming from its alleged involvement with other clients who have been accused of multimillion- dollar frauds.

Three of the lawsuits against Arky Freed relate to the law firm`s work with ESM Government Securities Inc., the Fort Lauderdale-based securities dealer closed by the federal courts last March after discovering ESM owed $300 million to local governments and financial institutions around the country.

The other suit revolves around Arky Freed`s representation of a Venezuelan financier-turned-fugitive and seeks a $600 million judgment against the law firm and several other defendants. The amount sought in that one lawsuit would bankrupt the firm, Bruce Greer, a partner with Arky Freed, told a Dade County Circuit Court judge in September. However, Greer added that he doubted Arky Freed would lose the case.

A Dade County circuit court judge last week ordered the Miami law firm of Horsnby & Whisenand to withdraw as counsel for the Venezuelan bank.

Stephen Nelson, managing editor of Legal Times, a trade publication based in Clifton, N.J., saw the suits as part of growing trend in the legal profession. ``It is unusual but not rare for a law firm to be the target of lawsuits based on corporate abuse issues,`` he said. ``It appears that more and more law firms are being brought in as defendant in the past few years.``

John F. Harkness Jr., executive director of the Florida Bar Association, said he could not recall another Florida law firm being sued over allegations of fraud or corporate abuse. ``It is the first one I`ve ever heard of,`` he said. While malpractice suits are becoming more common, Harkness said, most of these suits arise from missed court deadlines and allegations of incompetence.

In recent interviews, Eugene E. Stearns, a partner at Arky Freed, argued that legal malpractice suits are common. But he added, ``We are in the middle of a war.``

Stearns said his law firm is the innocent victim of hostile publicity relating to a former corporate client, ESM, the biggest failure of a government securities dealer in U.S. history.

``We have offended a handful of people who now see that they have an opportunity to even scores,`` Stearns said. ``There`s sort of an hysterical environment that surrounds ESM and has generated a tremendous amount of activity . . . We became a likely target -- like it or not -- for people who were careless with their facts.``

While Stearns said he is convinced that Arky Freed will prevail in court, he is concerned about damage to the firm`s reputation.

``We have enjoyed an excellent reputation,`` Stearns said. ``If our reputation is destroyed, then we have no business.``

The law firm, which was established a decade ago, has 67 lawyers and offices in Miami, Tampa and Orlando. That makes Arky Freed the 395th largest law firm in the country, according to Legal Times.

The American Lawyer, published in New York City, estimated that in 1983, Arky Freed grossed $10.6 million, or an average of $209,000 for each of its 51 lawyers at the time, producing average profits of $265,000 for each of the then 17 partners.